Suspicion Grows Over Korea Zinc's Ignio Acquisition... U.S. Court Recognizes Key Witnesses

Suspicions Over Ignio Acquisition at 100 Times Valuation
Employees of Korea Zinc's U.S. Subsidiary Cited as Witnesses

On the 23rd, the day of the temporary shareholders' meeting of Korea Zinc, shareholders of Korea Zinc are lining up to enter the shareholders' meeting hall at the Grand Hyatt Seoul in Jung-gu, Seoul. Photo by Jo Yongjun

Suspicions are growing that Korea Zinc's acquisition of Ignio, a U.S. battery waste recycling company, was an abnormal transaction. The U.S. court has also cited an employee of Korea Zinc's local subsidiary as a witness in the related trial.

Young Poong, the largest shareholder of Korea Zinc, and private equity fund (PEF) operator MBK Partners, who are engaged in a management rights dispute with Korea Zinc Chairman Choi Yoonbum, announced that the U.S. District Court for the Southern District of New York recognized an executive from Korea Zinc's U.S. subsidiary, Pedal Point, as a witness on the 16th (local time). This decision came just three business days after Young Poong requested the testimony.

As a result, Young Poong and MBK Partners have secured testimony from Mr. Ham, the Chief Financial Officer (CFO) of Pedal Point and a key figure deeply involved in the Ignio investment, as well as Mr. Ha, a senior manager. Previously, on the 2nd, the U.S. District Court for the Southern District of New York also secured the submission of internal documents related to the Ignio investment from Pedal Point and testimony from the company's legal representative.

Previously, Young Poong requested cooperation from the U.S. court to secure evidence for use in an ongoing shareholder derivative lawsuit in Korea. The U.S. court deemed Young Poong's request for discovery to be reasonable, stating in its decision, "Pedal Point's financial data may show that Ignio was acquired at an inflated price and may contribute to proving that the directors (of Korea Zinc) either failed to conduct proper due diligence on the transaction or knowingly accepted an artificially inflated company valuation."

Young Poong and MBK Partners believe that, through this decision, they have obtained decisive materials that will more effectively support the shareholder derivative lawsuit aimed at clarifying suspicions surrounding Korea Zinc's acquisition of Ignio and holding the Korea Zinc board of directors accountable.

Meanwhile, in 2022, Korea Zinc invested 580 billion KRW to acquire Ignio. As of the end of 2021, the company was in a state of complete capital erosion, with annual sales amounting to only several billion KRW. However, after the establishment of Ignio, Korea Zinc assigned it a corporate value nearly 100 times higher in a short period, leading to criticism that the transaction was abnormal.